A U.S. federal judge issued a permanent injunction against National Presto Industries Inc. from engaging in interstate commerce and ordering it to register as an investment company, the Milwaukee Journal Sentinel reported.
National Presto is a 100-year-old maker of electric housewares and other products in Eau Claire, Wisconsin, U.S. The U.S. Securities and Exchange Commission took civil action against the company on July 25, 2002, alleging that since at least 1994 Presto has operated as an unregistered investment company. On October 31, 2005, Judge Charles R. Norgle of the United States District Court for the Northern District of Illinois gave issued a summary judgment against National Presto.
Judge Norgle ruled that National Presto was an investment company within the meaning of the U.S. Investment Company Act and found that investment securities as a percentage of National Presto's total assets ranged from approximately 61 percent to 92 percent during the relevant time period. The Investment Company Act defines an investment company as having more than 40 percent of its assets in investment securities, which includes cash and marketable securities. Judge Norgle also ruled that National Presto was not primarily engaged in a business other than investing. Accordingly, it was an investment company and should have been registered with the Commission as such - and should have complied with the provisions of the Investment Company Act.
National Presto accumulated the cash "in an amount in excess of the needs of its operating business," according to the SEC complaint, from sales of subsidiaries in the 1970s and early 1980s. National Presto created National Holding Investment Company, a subsidiary, in 1979, with responsibility for managing National Presto corporate finances.
At the time of the summary judgment, Judge Norgle directed the Commission to submit a proposed Order requiring National Presto to comply with the Investment Company Act as well as a proposed Order of Permanent Injunction.
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